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Paul Brennan

Paul Brennan
Licensed Associate Real Estate Broker

2488 Main Street
Bridgehampton, NY 11932
Office: 631.537.4144
Mobile: 631.235.9611

2987 Montauk Highway
Sagaponack, NY 11962
Office: 631.537.4144
Mobile: 631.381.2887
Fax: 631.537.9104

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In the News

Hamptons Real Estate Sales Slow as Rising Rates Sideline Buyers

Aug. 4 (Bloomberg) -- New York's hottest summer spot for investment bankers and movie stars is cooling as mortgage rates climb. In a year of record Wall Street bonuses, home sales in the Hamptons fell 18 percent, signaling the end of a five-year boom.

A total of 1,727 homes were sold during 2006's first half in the Hamptons on the eastern tip of Long Island where billionaire investor Ronald Perelman and movie director Steven Spielberg own summer estates. That's down from 2,106 a year earlier, according to data compiled by Suffolk Research Service Inc., a property records company in Southampton, New York. The drop compares with a 4.3 percent slide nationwide.

The highest interest rates in four years are sapping confidence in real estate, even for wealthy Hamptons buyers who typically spurn mortgages and pay cash for their waterfront mansions, said Judi Desiderio, owner of Town & Country Real Estate in East Hampton. People are concerned that house prices will fall as demand wanes, she said.

``Wall Street bonuses traditionally fuel our market, but so far this year we haven't seen a lot of that money spent on real estate,'' Desiderio said. ``Everyone is talking about a bubble bursting as interest rates go up, so they're waiting on the sidelines to see what happens.''

Goldman Sachs Group Inc. and Morgan Stanley led Wall Street in handing out a record $21.5 billion of 2005 bonuses, according to New York State Comptroller Alan Hevesi. Bonus money had boosted Hamptons real estate prices since 2001 because people saw property as a safer investment than equities, said Paul Brennan, regional manager in the Hamptons for Prudential Douglas Elliman Real Estate.

`Five-Year Binge'

``The real estate market was on a five-year binge and now everyone has a hangover,'' Brennan said. ``The frenzy is gone and the fog is clearing as we deal with Iraq, gas prices and higher interest rates.''

Average prices for a Hamptons home broke $1 million for the first time in 2005, more than doubling from $499,194 in 2001. In the first six months of this year, the average price was $1.26 million, up 21 percent from a year earlier.

The average price gained 23 percent in the first six months of 2005 and 38 percent in 2004's first half. Prices last fell in 1998, according to Suffolk Research.

The average U.S. rate for a 30-year fixed mortgage is 6.6 percent, up from 5.8 percent a year ago, according to Freddie Mac, the No. 2 U.S. mortgage buyer. Borrowing costs increased as the Federal Reserve raised its overnight lending rate between banks 17 times in two years to 5.25 percent.

Waterfront Mansions

Still, the wealthy continue to buy waterfront mansions, said Diane Saatchi, a broker in Corcoran Group's East Hampton office. Buyers want Hamptons estates to complement collections of vacation properties that typically include a ski house in the U.S. Rocky Mountains, a mansion in a warm climate such as Bermuda, and a foothold in Europe, she said.

``The $20 million Hamptons houses are still selling because those buyers are immune to interest rates,'' Saatchi said. ``A terrific $4 million house is harder to sell because that's the middle of our market where you see interest rates and higher energy costs squeezing buyers.''

Prices in the Hamptons dwarf those paid by most homebuyers in the U.S. The average price of a new house in June was $290,600, according to the U.S. Commerce Department.

Sales of existing homes probably will decline 6.7 percent this year, according to the National Association of Realtors. Pulte Homes Inc., the largest U.S. homebuilder by market value, last week reduced its 2006 earnings forecast because of higher mortgage rates.

$45 Million Estate

In Southampton, where the average price was $1.55 million in the first six months of 2006, Edgar Bronfman Jr., chief executive officer of Warner Music Group, in January paid $31 million for a Bridgehampton estate and an adjacent lot owned by coffee importer Rainer Schoenbach.

``As long as rich people keep getting richer, these guys are going to come out to the Hamptons and spend their money on trophy houses,'' said George Simpson, president of Suffolk Research.

The other top deals so far this year include $26.5 million in April for a mansion sold by Robert Villency, chief executive officer of a Manhattan furniture design company, and $26 million paid for an oceanfront estate in Wainscott owned by cosmetic heir Ronald Lauder, chairman of Estee Lauder International.

All those fell short of the record, set by Stewart Rahr, the CEO of drug wholesaler Kinray Co. Rahr paid $45 million in 2005 to copper trader David Campbell for a 25-room mansion on Georgica Pond in East Hampton.

Also last year, Yahoo! Inc. Chairman Terry Semel paid $43 million for the East Hampton estate of Stephen Schwarzman, CEO of U.S. buyout firm Blackstone Group LP.

Sag Harbor

Based on median prices, Riverhead had the biggest gain of the five-town Hamptons area, rising 24 percent to $418,700. Other towns on the so-called North Fork, the less expensive area of the Hamptons, also saw prices grow at a faster pace than the tonier South Fork. Shelter Island had a 15 percent increase to a $940,000 median price and Southold grew 12 percent to $525,000.

``Real estate in the North Fork is hot,'' said Suffolk Research's Simpson. ``You won't be rubbing elbows with the beautiful people, but it's less congested, prices are lower and it's a relaxing place.''

The median price in East Hampton, home to Perelman, Spielberg and Jonathan Tisch, CEO of Loews Corp., grew 13 percent to $900,000. Southampton, which includes Sag Harbor, Bridgehampton and Water Mill, had the smallest median price growth in the Hamptons, increasing 4 percent to $766,000.

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